SpaceX nears lift-off

Katie Martin (0:06)

Pushkin.

The stock market listing of SpaceX is coming, and the hype is real. Elon Musk reckons this thing, I don't know, cobbling together AI satellites and all sorts of other stuff is worth, get this, 1.75 trillion dollars. The bravado is quite something. Today on the show, we pick through some of the details of the SpaceX listing and ask seriously now, what the hell?

This is Unhedged, the Markets and Finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist at the FT in London, which is sweltering, I tell you, under a record breaking heat wave. Stay hydrated, people. Joining me, back from his travels in New York, we have the big fella, Mr. Robert Armstrong. Rob, say hi.

Rob Armstrong (1:00)

Hi.

Katie Martin (1:02)

Or you could even say chow, given that you've been on your travels.

Rob Armstrong (1:05)

Chow, chow bella.

Katie Martin (1:08)

But we also have back on the show, Mr. John Foley, head of Lex. John, hi.

John Foley (1:14)

Hi, Katie.

Katie Martin (1:15)

So John, you've been digging through hundreds of pages of docs from SpaceX about its proposed listing. What is your favorite bit of these documents, please?

John Foley (1:26)

My favorite bit, Katie, is the dinosaurs. It's the bit that says that if we don't buy shares in SpaceX, then the humans might go the same way as the dinosaurs.

Rob Armstrong (1:34)

Is that because Elon Musk is going to shoot a huge asteroid at anyone who fails to purchase?

John Foley (1:40)

That's what it says. That's literally what it says.

Katie Martin (1:44)

Yeah.

Rob Armstrong (1:45)

No. No, what does it literally say?

John Foley (1:48)

So the reason that Musk says that SpaceX is doing what it's doing now, it's in the section called Why This Matters Now, is that they want to make sure that humans don't have the same fate as the dinosaurs. And the way to ensure that is presumably to build colonies on Mars and start mining asteroids and putting data centers in space, which the dinosaurs did not do.

Rob Armstrong (2:10)

I think that is what killed the dinosaurs in the end, is lack of data centers.

There's so much, there's so much about this, but the offering document, how the market is preparing for these massive IPROs. I don't even know where to begin. Where shall we begin with this?

Katie Martin (2:27)

Let's begin with the start, right? So SpaceX says that its mission is to build the systems and technologies necessary to make life multi-planetary, to understand the true nature of the universe and to extend the light of consciousness to the stars. So ambitious.

Rob Armstrong (2:48)

How that caches out, how that caches out is, well, they have a space business, which we all know about. They do send things into space. In the last year, four billion dollars of revenue doing that and a small loss. So the costs were 4.7, revenue for loss somewhere around 700 million dollars. So one thing you're buying when you buy this at a valuation of one and three-quarters trillion American dollars, is a loss-making space business.

That is not growing wildly fast, by the way. The revenue in that business in 2025 grew at under 10 percent. So that's something. Next business, John, what do we have? Connectivity. This is a real business and a very good business.

John Foley (3:38)

This is today the good bit, right? This is Starlink, which is the satellite communications business, and is where most of the revenue and most of the profit, well, the only profit actually comes from at the moment at SpaceX.

But it is growing very rapidly. It's got about 10 million subscribers. It could have more than that. And the game there is putting satellites in space and hooking up people who maybe don't have access to broadband at the moment. The problem with this is that the further into emerging market SpaceX gets with this, the lower the price it can charge. So its revenue per user is falling. And also satellites, and they don't really get into this, and it's hard to see this in the documents, but satellites depreciate very quickly. So they last about five years, and then you have to replace them. So the depreciation costs for a satellite business are really high. They don't actually break that down very clearly in this document, but it is something that investors will need to think about.

Rob Armstrong (4:24)

It's a capital intensive business, is what you're saying. But just for the record, $11.4 billion in revenue, 2025, up almost 50% from the year before.

Katie Martin (4:34)

What is that, the Starlink bit?